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US Economy in Question

By Richard Russell

 

China is the second biggest economy on the planet and what happens in China is therefore extremely important. China's devaluation has put pressure on commodities. China's leaders are obviously uncomfortable with the crash in the Chinese stock market.


In the meantime, the health of the US economy is in question. The Fed's balance sheet is now an astronomical $4.5 trillion and the Fed is anxious to normalize its position. The Fed's target of 2% inflation has not been reached, due in part to the world deflationary trend. Some skeptics are calling for a return of quantitative easing. But if the Fed turns again to QE it will be an admission that the US economy is weaker than had been thought. 

 

The latest issue of Barron's describes professionals as betting that the market will be higher by 10% by year end.

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